Thursday, December 1, 2016

Can I Refinance My Mortgage If I File Chapter 13 Bankruptcy?

Mortgage refinancing can be beneficial when you are struggling to make your house payments. A refinance can lower your interest rate, which results in lower monthly payments. A lot of times you are also allowed to take out some of the equity you have built up in your home, and you can use that money to pay off higher interest rate debts, which also saves you on your monthly obligations. Or, you might be permitted to skip a payment or two, and those funds can also be used to put towards other debts. But what do you do if you need to file bankruptcy? Can you still refinance your house?

In a Chapter 13 bankruptcy, you are allowed to alter the payment scheme on many of your debts. For example:

●          Autos do not have to be repaid in full when you file a Chapter 13 bankruptcy case. Instead, you are permitted to pay only the value of the car rather than the balance. You area also allowed to modify your auto loan by paying a lower interest rate. When you combine a lower rate with a lesser balance, the payments decrease.
●          Credit cards are not required to be paid in full in a Chapter 13, but rather you will pay percentage of what is owed. The percentage is different for everyone, and depends on the amount of disposable income you have each month. But generally speaking, you will only pay back pennies on the dollar on your credit card debt through a Chapter 13 bankruptcy plan.
●          If you are behind on your mortgage, you are allowed to pay the past due amount over a period of time during your Chapter 13 case. Doing this allows you to get caught up at a rate that fits your budget, rather than having to come up with the entire back due amount all at once.
If refinancing is your goal, you may have to wait until after you Chapter 13 is over. But the benefits you get while in a Chapter 13 case will likely eliminate your need to refinance. When you finish a Chapter 13 case, your mortgage should be considered current, and without other debts to be paid you will be able to keep the payments current. For help understanding what a Chapter 13 can do for you, call us today.

For more information about Chapter 13 bankruptcy and your mortgage payments, call us today or reach us online at We offer appointments at multiple locations for your convenience and can schedule a time to visit with you today.

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